February 23, 2010

Location Schmocation

There is a retail opportunity waiting for you near one of the busiest intersections in the Hamptons. Everyone who travels by car to Water Mill, Bridgehampton, East Hampton and beyond passes by this squat little building. Thousands upon thousands of cars within reach on a busy summer weekend.

Years ago it housed a cute but dated little breakfast place. Rent increases being what they were back then, retail just couldn’t live by breakast alone. Soon, though, a Starbucks took over the joint. What could be more Hamptons-like than a tony Starbucks?

The coffee shop closed within a few years, hanging on many months more than it probably should have. And now the squat little building sits empty once again. You see, there is something I didn’t tell you about this “great” location. Its neighbors.

The building is surrounded on all sides by auto “stuff.” Three gas stations, a tire-repair shop, an oil change operation, and a mechanics shop. Auto “stuff” people don’t do Starbucks. And neither do their clients, at least not while they are waiting for their tires to be rotated.

Toward the end of 2009, Tiffany sued a California shopping center operator for allowing an H&M store to co-locate. Tiffany said its contract stipulated that retailers “whose merchandise and/or price points are not considered to be luxury, upscale or better by conventional retail industry standards" wouldn’t be allowed to lease any space basically within a stone’s throw of the high-end jeweler.

"The location of the H&M store will cause irreparable injury to Tiffany's business reputation as a luxury retailer, a reputation that Tiffany has enjoyed and worked hard to maintain for more than a century and a half," the lawsuit said.

Same thing online by the way. Everyone wondered if Rupert Murdoch went mad (again) when he said he would block Google traffic to wsj.com. Perhaps he understood that almost all of the visitors coming from a Google search are the great unwashed.